Exclusive: David Davis on “crony capitalism”

The government is "far too close" to big business, David Davis writes in Prospect's March issue

David Davis, the senior Conservative MP and former shadow home secretary, has launched a scathing attack on what he calls “crony capitalism” of the current government, accusing it of being “far too close” to big business and “shamelessly courting” Rupert Murdoch.

Davis, who narrowly lost the leadership to David Cameron in 2005, also criticises the government’s “terrible pickle” over the £1 million bonus given to RBS’s Stephen Hester, saying: “Apparently the government…feared Hester would quit if it vetoed the bonus. So what?”

In an exclusive article for Prospect’s March issue, Davis writes that “when it comes to crony capitalism, government is often not the solution, but part of the problem…If it is not addressed, Britain’s crony capitalism will inflict huge damage to our interests, economy, industry and society. The gap between achievement and reward will widen. Social mobility will continue to fall. It will also continue to stifle growing businesses, destabilise our banking sector, and poison our politics.”

As controversy continues to rage around Rupert Murdoch’s News International media empire, the senior Conservative criticises Cameron’s closeness to the mogul. “Crony capitalism has also characterised political leaders’ relationships with the press,” he writes. “Prior to the phone hacking scandal, the shameless courting of Rupert Murdoch and other media moguls by politicians was no less unedifying for being standard practice. That cosiness went far beyond exclusive interviews and off the record briefings.

“David Cameron has accepted in parliament that he got too close to newspaper proprietors after becoming leader. It is arguable that the Leveson inquiry should be looking as much at the behaviour of political leaders as at the behaviour of newspaper editors.”

Davis spreads the blame for what he calls “the network state” across government departments: “Wherever you look in Whitehall the government is too close to big business…In business, we need to drop the idea that biggest is best, and that Britain’s economic health is well served by focusing ministerial attention on a few dozen multinational corporations. The Ministry of Defence’s disastrous record in public procurement is partly a product of an overly cosy relationship with a few suppliers. The Department of Energy and Climate Change’s clumsy environmental policies stem from close contacts with half a dozen enormous companies.”

The former public accounts committee chairman, who is seen as a focal point for dissent against the coalition on the Tory right, lists examples of the government’s “crony capitalism”: In September last year it was announced by the Department for Business, Innovation and Skills that the bosses of Britain’s 50 biggest companies would be assigned ministerial “buddies,” to give them a hotline to discuss their concerns….[Many] will see this as proof the government pays too much attention to big business and is too close to its top executives. Where is the hotline for small business leaders?

“Then there are the revelations that Her Majesty’s Revenue and Customs (HMRC) has allowed some of the world’s biggest companies to pay far less tax than they owe. Companies that have allegedly benefited from HMRC’s generosity have been investigated by the Public Accounts Committee following reports in the media and dismay among the public.

“Worse still, small businesses this year face new fines of hundreds of pounds for filing their tax returns late, even if they have paid every penny they owe. This is the network state in action, a place where contacts count and what you do matters less than who you know.”

Plus read James Macintyre’s analysis here

The March issue of Prospect is now on newsstands. Find your nearest retailer here

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